Economic Impact of School Shutdown during Covid-19
GS Paper – 2,3 Education, Government Policies & Interventions, Growth & Development
Why in the news?
According to an Asian Development Bank (ADB) report, India’s GDP is anticipated to suffer the greatest decrease in South Asia as a result of the Covid-19-related school shutdown.
School closures resulted in a drop in global GDP and employment. This scenario is projected to worsen with time.
India was one of the countries with the longest school closures during the Covid-19 pandemic.
What will be the most significant economic impact?
Global Situation:
- Economic impact:
GDP is expected to fall by 0.19 percent in 2024, 0.64 percent in 2028, and 1.11 percent in 2030, totaling $943 billion.
- The Effect on Skilled Labor:
School closures will deprive around 5.44 million persons worldwide of employment in the skilled labour market by 2030.
Employment is expected to fall by 0.05 percent in 2024, 0.25 percent in 2026, and 0.75 percent in 2030, for a total salary loss of $94.86 billion.
- The Effect on Unskilled Labor:
The employment rate is expected to fall to 0.22 percent in 2025, 0.51 percent in 2027, and 1.15 percent in 2030.
In 2030, about 35.69 million persons would shift to the unskilled labour force, resulting in $121.54 billion in lost pay.
- Different effects on various economies:
Across Asia, the worst-affected economies are those with large rural student populations, as well as those in the poorest and second wealth quintiles. This is due to challenges with internet connectivity, making online education inaccessible.
As many impacted students transitioned to unskilled labour, economies with a large proportion of unskilled labour employment suffered significant learning and earning losses.
Indian Situation:
- Economic impact:
In terms of percentages, its GDP will fall by 0.34 percent in 2023, 1.36 percent in 2026, and 3.19 percent in 2030.
By 2030, India will account for 10% of the $943 billion global GDP loss.
- The Effect on Labor:
At the moment, India’s workforce consists of 408.4 million unskilled workers and 72.65 million skilled workers.
With a 1% and 2% reduction in skilled and unskilled labour jobs, respectively, a large migration towards unskilled labour is predicted.
What exactly is the Asian Development Bank?
The Asian Development Bank (ADB) was founded in 1966.
It consists of 68 people. India is a founder member of the organisation. 49 are from Asia and the Pacific, while 19 are from elsewhere.
Its goal is to encourage social and economic development throughout Asia and the Pacific.
ADB’s five largest shareholders as of December 31, 2020 are Japan and the United States (each with 15.6 percent of total shares), the People’s Republic of China (6.4 percent), India (6.3 percent), and Australia (5.8 percent ).
Its headquarters are in Manila, the Philippines.
The Way Forward
The Indian government is taking aggressive steps to stabilise the economy, including monetary easing, fiscal stimulus, and supportive financial regulation. It also recently launched the e-Shram portal. However, greater investments in education are required, as well as a focus on closing the digital divide, to offset the impact of learning deficits during the pandemic.
Assessments for pandemic-affected pupils can help with learning recovery.
The government should emphasise education spending in the budget. Adequate funding and resources must be directed toward students from rural, economically disadvantaged, and socially disadvantaged communities who were disproportionately affected by the pandemic.
Furthermore, young skill training programmes for those who have previously graduated from high school must be launched.
Educational reforms must be implemented to promote both face-to-face and distant learning.
